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Daily Market Commentary - 12/01/2009

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Jan 12, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    12 January 2009, Monday
    Fundamental Outlook at 1500 GMT (EST + 0500)


    EURO
    The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3325 level and was capped around the $1.3475 level. European Central Bank President Trichet spoke at the Bank for International Settlements meeting today and said “The global economy will slow down significantly in 2009 with the industrialized economies having negative figures. It is also noted that 2010 should be the year of the recovery.” The ECB is expected to reduce its official interest rates by 50bps on Thursday to a record low of 2%. German government officials will convene tonight to discuss the next fiscal stimulus plan that is expected to be worth up to €50 billion over two years. More than one million Germans may lose their jobs this year, according to economists, and push the unemployment rate above 9%. The ECB confirmed commercial bank deposits held at the ECB surged to a record €315 billion, an indication that banks have an increasing reluctance to lend funds to each other. Eurogroup chairman Juncker said he wants to pressure eurozone financial institutions to increase their lending activity. In U.S. news, traders are closely monitoring a possible request by President-elect Obama to ask Congress of the remaining US$ 350 billion of the US$ 700 billion bailout fund. ECB officials including Quaden and Liikanen pressed the case for the central bank to adopt greater supervisory powers, following recent comments from Trichet. Euro bids are cited around the US$ 1.3055 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.60 level and was capped around the ¥90.25 level. Japanese financial markets were closed overnight but the yen gained ground on escalating risk aversion ahead of a busy week of U.S. economic data and earnings reports from public companies. Trade, bank lending, and current account data will be release overnight. Bank of Japan is expected to keep monetary policy easy for the next several months. The Nikkei 225 stock index closed Friday at ¥8,836.80. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥120.10 level and was capped around the ¥121.45 level. The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥133.75 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥80.10 level. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8370 in the over-the-counter market, up from CNY 6.8356. People’s Bank of China Governor Zhou said “Most people believe it (8 percent GDP growth for 2009) is a reasonable goal but we know we need to watch the international situation.”

    STERLING
    The British pound moved sharply lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4860 level and was capped around the US$ 1.5145 level. Prime Minister Brown pledged this weekend to spend ₤500 million to prevent unemployment from worsening. Brown is expected to announce plans later this week to increase bank lending, saying “We've got to make sure this risk aversion to lending is brought to an end.” Brown will meet with French President Sarkozy and German Chancellor Merkel to discuss common economic problems. Cable bids are cited around the US$ 1.3920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9020 level and was supported around the ₤0.8860 level.

    SWISS
    The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1240 level and was supported around the CHF 1.1105 level. Swiss National Bank is expected to keep monetary policy easy for the next several months. U.S. dollar offers are cited around the CHF 1.1330 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4940 level while the British pound lost ground vis-à-vis the Swiss franc as sterling tested bids around the CHF 1.6610 level.

    AUD
    The Australian dollar came off sharply vis-à-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.6835 level and was capped around the $0.7000 figure. Data released in Australia overnight saw ANZ job advertisements fall to recessionary levels last month. Australian dollar bids are cited around the US$ 0.6600 figure.

    CAD
    The Canadian dollar depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 1.2000 figure and was supported around the C$ 1.1870 level. Data released in Canada today saw November new housing prices fall 0.3% m/m and up 0.7% y/y, a decade low. The Canadian media reported the federal government may run up a C$ 40 billion budget deficit this year to counter the impact of the recession. U.S. dollar offers are cited around the C$ 1.2210 level.
     
    #1 gcitrading, Jan 12, 2009
    Last edited by a moderator: Jan 12, 2009
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